Inputs
Fill in your peak demand and tariff details. Use either target peak, reduction kW, or reduction percentage.
Disclaimer: This tool provides planning estimates only. Utility tariffs can include ratchets, seasonal rules, coincidence windows, and other billing determinants.
Example Data Table
A sample scenario illustrating how demand reduction impacts billed demand and monthly charges.
| Scenario | Peak (kW) | Ratchet (kW) | Billed (kW) | Rate ($/kW) | Demand Charge ($) |
|---|---|---|---|---|---|
| Baseline | 300 | 0 | 300 | 20.00 | 6,000.00 |
| After 30 kW reduction | 270 | 0 | 270 | 20.00 | 5,400.00 |
| Monthly savings | — | — | — | — | 600.00 |
Formula Used
- Billed Demand (kW) = max(Peak Demand, Ratchet Minimum)
- Demand Charge ($/month) = Billed Demand × Demand Rate
- Gross Savings ($/month) = Baseline Charge − New Charge
- Adjusted Savings = Gross Savings × Persistence %
- Annual Savings = Adjusted Monthly Savings × Billing Months
- Simple Payback = Net Cost ÷ Annual Savings
- NPV = Σ(Annual Savings / (1+r)^t) − Net Cost
Use persistence when demand reductions do not apply every peak event. NPV assumes constant annual savings across the project life.
How to Use This Calculator
- Enter your billing-period peak demand and the demand charge rate from your tariff.
- If your tariff includes a minimum billed demand, enter it as a ratchet.
- Choose one reduction method: target peak, reduction kW, or reduction percentage.
- Set persistence to reflect how reliably you can control peaks.
- Add project cost and any incentives to evaluate payback and NPV.
- Press Submit to see results above the form, then export CSV or PDF.
Demand charges and the cost of peaks
Demand charges are billed in dollars per kilowatt, using the highest measured demand in a billing period. One short spike can set the month’s billed demand. On a $15–$30/kW tariff, shaving 10–30 kW can save $150–$900 per month and reduce invoice volatility across seasons.
Why ratchets change the savings story
Some tariffs apply a ratchet that sets billed demand to the maximum of the current peak and a minimum level tied to prior peaks. If a ratchet is active, peak shaving may not reduce billed demand until the ratchet window resets. Modeling billed demand as max(peak demand, ratchet minimum) clarifies the outcome and supports realistic budgeting.
Interpreting persistence and operational risk
Peak plans can miss during heat waves, maintenance, or production surges. Persistence converts gross savings into an expected value. Example: a 25 kW reduction at $18/kW cuts the demand charge by $450; at 85% persistence, expected savings are $382.50. Higher persistence usually requires automation, alarms, and rehearsed curtailment steps.
Project economics using payback and NPV
Simple payback screens opportunities by dividing net cost by annual savings; net cost subtracts rebates. NPV discounts annual savings over the project life at your discount rate, capturing time value of money. A positive NPV suggests the project adds value today. If you use 8% and a 10‑year life, each $1,000 of annual savings is worth roughly $6,700 in present value.
Practical steps to reduce billed demand
Start with interval data to find peak drivers and coincidence patterns. Stagger motor starts, limit overlapping ramps, and shift flexible loads outside peak windows. Storage can clip short peaks, while controls enforce demand limits with prioritized shedding. Confirm the tariff’s billed demand rule, then monitor monthly peaks and adjust setpoints to sustain savings. Document the achieved peak each month, compare against the target, and investigate exceptions immediately so corrective actions keep savings aligned with forecasts for the next billing cycle.
FAQs
What is a demand charge in simple terms?
Demand charge is the fee based on your highest measured demand during the billing period. It is usually priced per kilowatt and can be set by a short peak event.
Why does the calculator use billed demand instead of peak only?
Many tariffs bill demand using rules such as a minimum billed level or a ratchet. Using billed demand helps reflect what appears on invoices when those rules apply.
Which reduction input should I use: target, kW, or percent?
Use a target peak when you have a firm demand limit. Use kW reduction for a known curtailment or storage output. Use percent when you only have an estimate.
How should I choose the persistence value?
Start with historical performance of peak controls. If actions are manual, persistence may be lower. Automated controls with alarms and clear priorities usually support higher persistence.
Does this include energy charge savings?
No. The outputs focus on demand charges. If your strategy also shifts consumption, calculate energy savings separately and combine them with demand savings for a fuller business case.
What does a positive NPV mean here?
A positive net present value means discounted savings exceed the net project cost at your chosen discount rate and project life, indicating the investment is financially attractive.